A Study On The Relationship Between Earnings Management Of Listed Companies And Accounting Standards

Earnings management is an action in which the enterprise's management deliberately adopts variety of methods to affect the accounting data especially the accounting earnings in order to achieve private benefit or maximize the value of enterprises on the precondition of compliance with accounting standards. Previous studies mostly focused on the concept, motive and methods of earnings management. In the time of the issuance of new accounting standards of China, this paper diverts its attention to one of the restrictive factors of earnings management - accounting standards by taking into account the latest developments of earnings management, and on the basis of building the theoretical framework for earnings management, researches the relationship between earnings management and accounting standards. On one hand, accounting standards effectively restrict the occurrence of earnings management through enacting accounting rules; however, for one reason or another, accounting standards is unable to eliminate earnings management completely, even become a tool for corporate earnings management. On the other hand, the crisis of accounting information induced by earnings management provides evidence for setting of accounting standards, which is helpful for improvement of accounting standards; however, because of the existence of economic consequence of accounting standards, related interest groups give pressure to the institution that constitutes accounting standards via political tactics (usually reveal lobby) to pursue private benefit, which causes accounting standards could not keep neutral thoroughly. This paper also puts forwards some policy suggestion for China's setting of accounting standards on the basis of case studies and statistical analysis of the relationship between earnings management and accounting standards, which are helpful for improving China's accounting standards and restricting earnings management of listed companies. Following is a description of the major content of this paper:Chapter 1: Introduction. This chapter describes the motive for selecting this research topic, research methodology, major contribution and structure arrangement. A chief summarization on the earning management is given in this part. Chapter 2: Theories related to earnings management. This chapter introduces the concept of earnings management, and distinguishes it from "accounting policy choices" and "financial fraud". Major academic perspectives about advantages and disadvantages of earnings management include "Efficient Contracting Perspective", "Information Signaling Perspective" and "Opportunistic Behavior Perspective". If different perspectives are held, different views of earnings management would be obtained. This paper believes that we should adopt "Opportunistic Behavior Perspective" and restrict earnings management of listed companies. In addition, this chapter elaborates the characteristic of the accounting standard and concludes that view of techonology and view of non-techonology should be combined together effectively.Chapter 3: Theoretical analysis of the relationship between earnings management and accounting standards. This chapter elaborates on the relationship between earnings management and accounting standards from two aspects. On one hand, accounting standards effectively restrict the occurrence of earnings management through enacting accounting rules; however, accounting standards is unable to eliminate earnings management completely, even become a tool for corporate earnings management. On the other hand, earnings management is helpful for improvement of accounting standards; however, related interest groups give pressure to the institution that constitutes accounting standards, which causes accounting standards could not keep neutral thoroughly.Chapter 4: Empirical analysis of the relationship between earnings management and accounting standards. This chapter corroborates the contents of theoretical studies and gets preliminary conclusions, on the basis of case studies and statistical analysis of alteration in accounting policies, assets depreciation reserves and non-recurring profit and loss.Chapter 5: Comments and policy suggestion for China's new accounting standards. This chapter gives comments to China's new accounting standards based on earnings management, and put forwards some policy suggestion for the improvement of China's accounting standards...